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The Changing Structure of the European High-Tech Economy

1.0 Introduction to the European High Tech Economy

The European high-tech economy is broken down in this book based on regional analysis of serviceable geography, or basically a distance marker from airports or factories. As is the case in the USA, the market in Europe is fragmenting with demand being introspective and only remaining in place at this writing, and seemingly, because of protectionism; remains in the continent. The way to look at Europe is that everything seemingly that was not moved away from Europe has a supply chain that justifies its existence. This is exceedingly at the edge of the market where profitability is greatest.

2.0 Structure of the High-Tech Regional Markets in Europe

The Central European High Tech Economy

The Central European High-Tech Market Description

The central European high-tech is 49% of regional European demand. This signature of material consumption supports a market rich in automotive and industrial end market customers and active factories.

Germany

With a population of 81 million people and 21% of the EU economy, Germany is the largest consumer of materials supporting high-tech in Europe.

What is remarkable is that while Germany has increased its overall share of electronic component and materials consumption in the European continent since 2000, the overall value of component and materials consumption has shrunk due to the movement of key factories offshore to China, Korea and the Rest of Asia. Therefore, the German market shifted dramatically to a dual fitting of automotive and industrial electronics accounting for the future direction of the German high-tech economy. The German market also shifted away from consuming mass produced low voltage components for the handset business model toward a high voltage component and material solution for the future automation business.

Hungary

Thanks to Hungary’s thriving high-tech sector, especially in the fields of “Information and Communications Technology”, high-tech component and material consumption in Hungary has grown substantially. For decades, Hungary has specialized in vehicle manufacturing, giving it an extensive pedigree in the auto parts and associated electronic components sectors. Currently, electronics manufacturing accounts for more than 20% of Hungary’s total production output, while also providing about 112,000 jobs. Many world-class electronics companies have now established their regional headquarters, manufacturing facilities and R&D activities in Hungary.

The Czech Republic

The Czech Republic resembles the end-markets in Hungary- largely back-end assembly of consumer AV and professional electronics and for automotive end markets.

The entire electronics industry accounts for more than 14% of Czech manufacturing output, which makes it the second largest sector in the economy. Over 17,000 companies employ more than 180,000 workers in the sector. Most of the sector’s output is exported, mainly to markets within the European Union.

Poland

Consumption of electronic components and materials in Poland is largely known for TV set production. Poland also has unique expertise in the large-scale production of glass for cathode ray tube. The author knows that certain US vendors of specialty glass source artisan glassworks in Poland, where the combination of skilled labor and low cost makes for a profitable global partner.

Slovenia

1% of European component and material consumption is in Slovenia and goes to a basket category of manufacturers who are catering to the production of small electrical motors for automotive, industrial and large home appliance products.

The Northern European High Tech Economy

The Northern European high-tech economy includes Holland, United Kingdom, Switzerland, Ireland and Sweden. Here the signature of consumption differs as the Central region because it prefers components and materials that supports a market rich in consumer AV, lighting and power supply manufacturers.

Holland

Electronic component and material consumption in Holland is value added and application specific and includes some unique products with emphasis upon line voltage devices, high frequency connectivity and high components and materials for medical test and scan equipment. Lighting ballasts are also an important part of the Holland high-tech economy and of course, this is really describing the footprint for one of the key electronics firms in Europe Royal Dutch Philips Electronics.

United Kingdom

The United Kingdom has the massive BAE Systems at 16.3 BB British Pounds ($25 BB USD) and is Europe’s largest electronics company and consumer of electronic components and materials. Rolls Royce Automotive Division and Aircraft Engine Division are also important customers for electronic components and materials and the bespoke nature of consumption for components; especially those operating at high temperatures >200 degrees C for defense aircraft should not be overlooked for future growth within the country. There is also the large Delphi automotive electronics plant located in the UK as a major consumer of electronic components and materials. GKN PLC is also a major consumer of components and materials for automotive and aerospace.

Switzerland

3% of European electronic component and material sales are in Switzerland and go to Asea Brown Boveri for industrial electronics and utility grade switchboards and switchgear apparatus as well as smart metering products. The strength of Switzerland's electronics industry lies in a small range of niche products, with high added value. Control and instrumentation, and consumer goods (mainly watches) are the two sectors of industry, which dominate Swiss electronics output. Watch production is the major industry accounting for 33.5% of total production with control and instrumentation having a 28% share in 2016. During the year a number of companies looked to utilize overseas operations to offset the ending of the peg for the Swiss franc against the euro.

Ireland

The Irish market for electronic component and materials is also an important high-tech manufacturing base in Northern European.

The Intel Factory in Leixlip, Kildare; is the largest manufacturing plant for Intel outside of the United States; Cisco is also in Ireland in Oranmore, Co. Galway. Dell is a major computer vendor located in Ireland (The company, still the third-biggest technology firm in Ireland by turnover, but it has largely switched to R&D); there is also EMC storage (bought by Dell), also operating in Ireland.

Sweden

The Sweden the high-tech economy is focused on large scale industrial automation equipment at related Asea Brown Boveri factories. This is also the home to the high-tech telecommunications switches made by Ericcson, the largest manufacturer in the country by far of high-tech related equipment.

The Southern European High-tech Economy

The Southern European high-tech economy supports a market rich in automotive, telecommunications and space electronics.

France

The French high-tech economy is one of the largest and most diversified in Europe and reflects an advanced technology base requiring similar components and materials. France is a major producer in the fields of medical (Soren), Thales (Defense satellites) defense (EADS), aerospace (EADS), energy (Alstom, Schneider LeGrand) Alstom Trains and telecom infrastructure (Alcatel). In Telecom infrastructure France has many advantages, with a world leader, Alcatel-Lucent, and several major players, including integrators such as Thales, and companies operating on specific sectors (Gemalto, Oberthur and Technicolor). France can also count on innovative SMEs boasting advanced technologies, especially in the optical sphere.

The French electronics industry continues to be dominated by the production of fixed and wireless communications infrastructure equipment. The country is also a leading producer of radar, navigation and defense electronics which accounted for 25% of the total output of electronics in 2017.

Spain

The automotive industry in Spain remains a viable end-market for electronic components and materials in the country. Spain produced 2.7 million cars which made it the eighth largest automobile producing country in the world and the second largest car manufacturer in Europe after Germany. In all, there are 13 factories located in Spain which are supported by a thriving local car components industry, including rapidly growing Spanish multinationals such as Gestamp Automocion (Steel) and Grupo Antolin (Car Interiors).

The major automotive factories in Spain are as follows:

Daimler AG (Vitoria Plant)

Ford’s largest plant in Europe (Almussafes Plant)

General Motors: (Figureulas)

Nissan (Barcelona)

PSA (Vigo)

Volkswagen (Pamplona)

SEAT (Mantorell)

SEAT is the sole active Spanish brand with a mass production potential and capability of developing its own models in-house. Today it operates as a subsidiary of the Spain is also the home to EPCOS’ massive film capacitor production factory in Malaga.

Italy

The Italian market for electronic component and materials boasts some 1,200 associated companies. The Italian Electronics Industry amounts to 63 billion euros of turnover (of which 29 billion of Euros in export). The largest market for electronic components and materials in Italy is the automotive industry which produced about 1.1 MM Cars and light trucks in FY 2017, and of that about 90% came from one customer, FIAT. FIAT brands include Lancia, Ferrari, Maserati and Alfa Romeo.

Portugal

Portugal assembles foreign cars and trucks with production of nearly 200,000 units annually including Volkswagen's “autoEuropa” and Groupe PSA Factories. Electronic component and material consumption is largely to the automotive space and the VAW factory and PSA factory respectively.

Summary and Conclusions:

What Has Changed Since Our Last Market Review

The European high-tech economy had been based on a large footprint of wireless handset production in Germany in earlier reviews of this book; and this had shifted away from Germany but remained on the continent in former Soviet bloc countries, but this has tragically disappeared from the European high-tech landscape and all component supply chains have largely followed suit. Therefore, the European high-tech economy now resembles a low-volume, high-value segment of the overall high-tech economy that requires specific types of materials to continue to grow over the next five years.

Dennis M. Zogbi

Dennis M. Zogbi is the author of more than 260 market research reports on the worldwide electronic components industry. Specializing in capacitors, resistors, inductors and circuit protection component markets, technologies and opportunities; electronic materials including tantalum, ceramics, aluminum, plastics; palladium, ruthenium, nickel, copper, barium, titanium, activated carbon, and conductive polymers. Zogbi produces off-the-shelf market research reports through his wholly owned company, Paumanok Publications, Inc, as well as single client consulting, on-site presentations, due diligence for mergers and acquisitions, and he is the majority owner of Passive Component Industry Magazine LLC.